Vice President Joe Biden resurrected years-old, Democratic talking points on the Affordable Care Act and oil production during a recent speech in New Hampshire:
- Biden said the ACA would reduce U.S. debt by “another $1 trillion over the next 10 years.” That’s a Democratic estimate for 10 years starting in 2022 or 2023, not the next 10 years. The Congressional Budget Office projects the law would reduce the deficit by $109 billion over the 2013-2022 period, but said beyond that it is “very difficult to predict.”
- Biden said North America has more active gas and oil rigs “than all the rest of the world combined.” North America had 2,051 rigs operating in January and the “international rig count” was 1,258, according to a report cited by Biden’s office. But that report does not include China and Russia, which another industry report says had more than 3,500 active rigs combined in 2014.
Biden hasn’t said if he will run for president in 2016, but he has been making visits to key early primary states, including Iowa, South Carolina and, most recently, New Hampshire. He visited the University of New Hampshire School of Law on Feb. 25 to pick up the Warren B. Rudman Award for Distinguished Public Service.
In his speech at the law school, the vice president gave an upbeat assessment of the Obama administration’s achievements and the direction of the economy.
$1 Trillion Deficit Reduction?
Biden made his comment about the Affordable Care Act — referring to debt instead, which is the accumulation of yearly deficits minus any surpluses — when speaking on economic policies.
To be sure, CBO has long estimated that the Affordable Care Act would reduce yearly deficits, not add to them once both spending and revenues from the law are taken into account. But in recent years, CBO has stopped giving a hard estimate for even the next 10 years, saying instead only that “the ACA will reduce deficits over the next 10 years and in the subsequent decade.”
The latest hard number projection — $109 billion of deficit reduction over 10 years — is from a July 2012 CBO analysis of a Republican bill to repeal the ACA. The analysis went on to say, in reluctant, uncertain terms, that for the subsequent 10-year period (beginning in 2023), repealing the ACA would increase deficits by “a broad range around one-half percent of [gross domestic product],” meaning that with the law in place, deficits would be reduced by that general amount. (A 2011 CBO analysis gave the same loose, long-range estimate.)
CBO noted that the agency “does not generally provide cost estimates beyond the 10-year projection period,” because it’s difficult to project that far into the future. “Over a longer time span, a wide range of changes could occur — in people’s health, in the sources and extent of their insurance coverage, and in the delivery of medical care — that are very difficult to predict but that could have a significant effect on federal health care spending.” And, CBO said, such a calculation has to assume that all provisions of current law won’t change over the following 20 years, an iffy proposition.
Despite all of those caveats, Democrats took the “one-half percent of GDP” estimate and calculated that it would amount to a little more than $1 trillion, based on estimates of what GDP would be two decades into the future.
We first wrote about this claim in January 2011, when Democratic Rep. Nancy Pelosi claimed, as she was passing the gavel to Speaker John Boehner, that the health care law would “save taxpayers $1.3 trillion.” A few months later, in April 2011, President Obama said in a speech on deficit reduction that the ACA “will reduce our deficit by $1 trillion.” Neither politician mentioned that this was a 20-year figure filled with uncertainty.
In March 2011, CBO Director Douglas Elmendorf said in testimony to Congress that the impact of the law “becomes more and more uncertain the farther into the future one projects,” calling the second decade estimate “a rough outlook.”
The White House still includes the shaky deficit reduction claim on its website pages on the economy, saying the ACA would reduce the deficit “more than $1 trillion in the second decade.” The administration might want to update that page: It also includes an old estimate that the law would extend health insurance to 34 million Americans. CBO said in 2011 that that would be the reduction in the uninsured by 2020, but the most recent CBO estimate is a reduction of 27 million.
That’s just one illustration of how these types of estimates of future outcomes can change over time.
Rigging Oil Rig Data
The vice president also discussed energy, describing North America as “the epicenter of energy for the 21st century.” But then he went too far when he compared the number of operating crude oil and natural gas rigs in North America with the rest of the world.
Biden, Feb. 25: We have more gas and oil rigs, whether you like it or not, pumping today than all the rest of the world combined today. Combined today. And it’s growing.
We asked the vice president’s office where Biden got his information, but we did not receive a response. However, the U.S. Energy Information Administration — which collects data on U.S. oil and gas rigs, but not for other countries — referred us to Baker Hughes Inc., an oilfield service provider. Baker Hughes has been providing the industry with North America rig counts since 1944 and international rig counts since 1975. The company’s most recent monthly report shows that in January there were 2,051 rigs operating in North America (defined as Canada and the United States), while the “international rig count” was 1,258. Update, March 18: Biden’s office contacted us after we published this story and confirmed that it was referring to the Baker Hughes data.
Those figures give the false impression that Biden is correct. He’s not.
Baker Hughes does not include data for countries where reliable information is difficult to obtain. The company’s international rig counts do not include, for example, all of Russia and land rigs in China. Both are major oil-producing countries. In fact, the EIA says Russia and China were the third and fourth top oil-producing countries in the world, respectively, in 2013.
Baker Hughes, on its FAQ page, lists the countries and regions that are not included in its international rig count:
Baker Hughes FAQ page: The Baker Hughes International Rotary Rig Count is a monthly census of active drilling rigs exploring for or developing oil or natural gas outside North America (U.S. and Canada). The Baker Hughes International Rotary Rig Count does not include rigs drilling in Russia, the Caspian region, Iran, Sudan, Cuba, North Korea or onshore China. Iraq was excluded from the International Rotary Rig Count for the period September 1990 to May 2012. Syria is currently excluded from the International Rotary Rig Count as of February 2012 due to difficulty obtaining data as a result of continued civil unrest.
Baker Hughes does include offshore rigs in China, but there were only 33 of them in January. Most of China’s oil and gas rigs are on land.
BP Energy Outlook 2030, a report released in January 2013 by British Petroleum, estimated that, in 2011, China had about 1,500 land rigs in operation, and Russia, identified in the BP report as FSU (the Former Soviet Union), had more than 1,000. (See the chart in the BP report labeled “Onshore oil & gas rigs 2011.”) So, Russia and China combined — let alone the rest of the world — had more rigs operating in 2011 than North America, which Baker Hughes says had 2,298 that year.
Update, March 18: After this story was published, we received oil rig data for Russia and China from Research and Markets — a private research firm that produced a report called “Global and Chinese Land Drilling Rig Industry Report 2014.” In an exchange of emails, the company told us that there were 2,215 active oil and gas land rigs in China and 1,389 active oil and gas land rigs in Russia in 2014. So, Russia and China combined had more active rigs in 2014 than North America – and that, of course, does not include the rest of the international community. This story has been updated to reflect the company’s data.
Biden’s claim that the North America rig count is “growing” is also false. He could have made that case a few months ago, but plummeting crude oil prices have forced companies to shut down rigs.
As we mentioned, North America had 2,051 oil and gas rigs in operation as of January. That’s over 200 fewer than were operating in January 2014, when there were 2,273 rigs operating in North America. And the number of operating rigs continues to fall. For the week ending Feb. 20, there were 1,670 operating rigs in North America, down from 1,740 the prior week and down from 2,403 for the same week a year ago, according to Baker Hughes.
Wood Mackenzie, an energy consultancy firm that also produces rig counts, blamed the steady decline in active rigs on falling crude oil prices.
Wood Mackenzie press release, Feb. 19: “The oil price collapse is hitting onshore activity and rig operators, drilling rigs are currently being stacked at an alarming rate,” says Scott Mitchell, Research Director at Wood Mackenzie.
As for rigs in the United States, Wood Mackenzie’s release said the post-recession peak occurred in November 2014, when there was a monthly average of 1,859 active rigs in the U.S. But even at its recent peak, the number of U.S. rigs in operation was far less than what it was in the 1980s.
EIA historical data, from 1949 through 2012, show the number of crude oil and natural gas rigs peaked at 3,970 in 1981. So, the current level is less than half what it was more than three decades ago.
In boasting about North America having more oil and gas rigs than the rest of the world combined, Biden was repeating an old, Democratic talking point that Politifact wrote about in 2012, when President Obama made a similar claim. It should be retired.
— Lori Robertson and Eugene Kiely